The Sydney Morning Herald from Sydney, New South Wales, Australia • Page 1

LATE EDITION WEDNESDAY, MAY 25, 1977 Aid pledge to industry: 14 No. 43,505 FIRST PUBLISHED 1831 12 CENTS' 48 PAGES TELEPHONE 20944 mm jilted! JliwiiiM Serais coLur.it Prices going up Garter tells Fraser CIA actions not improper a freeze ends Beetson ready to play in The wage-price freeze ended yesterday. Today manufacturers and retailers will begin introducing price rises held back because of the freeze. The Prime Minister, Mr Fraser, called off the six-week-old freeze after the Conciliation and Arbitration Commission awarded a maximum wage increase of $3.80 a week. The Federal Government also withdrew its request to the Prices Justification Tribunal to defer announcing its decision on applications by companies for price rises.

Russians drop Podgorny from Politburo MOSCOW, Tuesday. The Soviet President, Mr Nikolai Podgorny, has been dropped from the Politburo, inner cabinet of the Soviet Communist Party. Podgorny, 74, has been Soviet head of State since 1965. Announcing his removal today, Moscow Radio said: "The Communist Party of the Soviet Union Central Committee plenum relieved Comrade Podgorny today of his duties as member of the Politburo of the CPSU." The announcement coincided with a plenary meeting of the Central Committee which heard a report on a new draft constitution for the Soviet Union from the party's chief, Mr Leonid Brezhnev. There was no immediate explanation of Mr Podgorny 's removal from the Politburo and whether it was linked with the constitutional changes.

He apparently remains President for the time being, but Western observers here believe he is not likely to stay in the position for very long. Since the mid-1960s Mr Podgorny has been seen as the third man in the Kremlin ruling triumvirate, with Mr Brezhnev, the party's general secretary, and the Prime Minister, Mr Alcxei Kosygin. The announcement of Mr Podgorny's removal took Moscow by surprise He returned only two months ago from a trip to Africa in which he sought to forge stronger links with developing nations. As President he travelled widely in the communist world and also visited Austria, Italy, Morocco, Algeria, Turkey and Finland. (AAP-Reutcr) He said there, was nothing in the reports of the Royal Commission on Intelligence and Security which gave any substance to recent allegations of CIA activity in Australia.

"Improper activities by the representatives in Australia of any foreign Government have in the past and would in the future be regarded just as seriously by my Government as they have been by previous Australian Governments." He said the previous Prime Minister, Mr Whitlam, had known the names of representatives of US intelligence agencies in Australia. "He was apparently then satisfied with the information he received because after a detailed inquiry he took no further action in relation to it," Mr Fraser said. Later Mr Fraser told a special radio and television news conference: "On my own initiative, a direct approach was made to President Carter through the Ambassador-designate (Mr Philip Alston) as he was at the time. "As a result of that, very firm words of assurance were incorporated in my statement in which these words had come, quite clearly, from the President himself. "What I rest that statement on is not only the advice of the Director-General (of ASIO) but also on the advice of the President of the United States." PAGE 6: Editorial.

PAGE 10: Fraser's statement; Whitlam's reply Oil companies, car makers and breweries are among those which have HefprrrH price rises granted by the its decision on their appli- cations. Consumers will probably nottce me nrst enects of the price surge in shops, particu larly supermarkets. The public relations man' ager for Woolworths. Mr Tom Harvey, said last night: "The tutu ui me uuuunai wage ucci- sion will be seen almost im mediately. 'Tomorrow will be iust an other day as before the price freeze and the staff will start to make price adjustments which have been pending since April 14.

"In all, the whole process TV- r3Vv-f hi 0 ferf i yi 5 i XM fei or 7 jvtfSsw rV' It I -vv jT life, tiri I )hmM From oflr Defence Reporter CANBERRA. The Prime Minister, Mr Fraser, said yesterday he had received President Carter's personal assurance that neither the US Government nor its representatives arc involved in improper or inappropriate activities in Australia. Mr Fraser told Parliament yesterday that his own careful review of their activities revealed that they were "fully consistent with the interests and policies of the Australian Government and people." He said there was a long established convention that close allies did not conduct covert activities within each other's territories. Mr Fraser again refused to comment on specific allegations that the CIA had funded Australian political parties, manipulated unions and monitored Australian communications from the Pine Gap facility near Alice Springs. He said the Royal Commission for which the Opposition Leader, Mr Whitlam, and the ALP national executive have called was totally unnecessary.

In reply, Mr Whitlam accused Mr Fraser of shirking and distorting the real issue at the centre of the CIA con troversy whether the Australian Government was ultimately responsible for its internal affairs and national sovereignty. "The CIA's interests are not necessarily those of Australia; they are not even necessarily those of the United States," he said. "Nor are Australia's inter- I I. .1 1 cms neccssmiiy muse ui inc Liberal Party." If it was good enough for the Americans to show a prompt and proper concern about these matters, why should the Australian Government not do likewise, he asked. Mr Fraser said Australia's defence relationship with the US involved extensive exchange of information and views with US agencies, including those concerned with intelligence and security.

"Under these arrangements officers from US agencies arc declared to the Australian authorities and work with various Australian agencies," he said. "Of course, ministers with relevant responsibilities know who they arc. Australian officers are engaged in similar declared capacities in Washington." Mr Fraser said public discussion on the CIA issue in the past four weeks and attempts to expose some of Australia's most closely held secrets were of serious concern to the Government. Restraint urged on both sides From MIKE STEKETEE Terrorists fire shots in school anon Co THE big stores have obviously and wisely been anticipating an early end to the freeze. A friend of Column 8 had a peck at a new price list drawn up last week by on of the large chain stores to take effect after the freeze.

Prominently on the list is "Tea $2 per 500g." That's almost $1 a half-pound, up about 20c. THE Lugarno ferry stopped crossing Georges River more than two years ago, but many people are still unaware. One of them was the driver of a low-loader carrying a 1.5-tonne helicopter. Heading for the South Coast yesterday he missed the small "Ferry Closed" sign at the intersection of Forest Road and Henry Lawson Drive at Peakhurst and ended up trapped in the small turning circle beside the river. After much backing and filling he finally got free.

Local residents tell of being woken at 3 am by the roar of 30-tonnc semis backing 250 metres out of the dead end. So please, Hurstvillc Council a BIGGER sign. THE Women's Action Alliance has just made a disturbing discovery. While a farmer can claim $500 re-hale on his non-workintt wife, a teait of, say, five working dogs, could entitle him to a tax deduction of about $1,000. THORNY problem.

When an anonymous uuiidtora resident dumped a grotesque but harmless Central Australian lizard in the foyer of Taronga Park Zoo last week, the fun began. Moloch hor-ridus, better known as the thorny devil, is hard to feed. He gobbles up great armies of black ants, more than the Zoo staff could find. So he had to go home to Centra-lia. An airline offered a free ride and he's now back in the bush.

FEMINISTS as well as Pan Am may take a dislike to moves by a second US airline. Continental, to fly the. Pacific to Australia. American women's liberationism forced it to drop an advertising campaign in which glamorous hostesses claimed, "We really move our tail for you." EXIT laughing. Thieves broke into a bulk food warehouse in Slack's Creek, a southern suburb of Brisbane, early yesterday and stole a $2,600 burglar alarm.

CHARLES Hellier, (he media officer of the Australian Freedom from Hunger Campaign, did not smile when he found $20 in one of the organisation's postage-free envelopes $20 in play-money. lUMiaggs i Schools: Two Sydney schools disrupted by strikes. Page 3. Israel: Begin could be unable to take over as PM. Page 5.

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The, president of the Australian Rugby League, Mr Kevin Humphreys, (right) and the secretary, Mr Ken Stephen, walk across the SCG No 2 to tell the Australian squad that Arthur Beetson has withdrawn. later games x) (inside I today Jl CHOOSING THE IIEl'J DOCTORS A radical new method of selecting medical students depends on personality as well as exam marks. Shaun Mcllraith reports. Page 7 The man who made $9m in 3 years Who is he and how did he do It? Finance, front page of Section 2 Tomorrow I Public transport A special report after a year under Labor. Phona 2 0944 to hava tha Harald dallvarad: lf aaaiar a aa.

should take about three weeks through an our national stores." 1t5er saidn tailors' Association in Canberra before taking any action. The assistant general man- agcr of lotal, Mr F. Rush worth, said the company now nopea ine on companies appt cations for a rise of between one and two cents a gallon would be granted by the tri- DUnal SOOn. In its judgment, the com mission awarded a 1.9 per cent increase in award wages up to $200 a week and a flat rise of $3.80 for higher incomes, It will mean an increase of about $2.70 a week for people on average award rates of around $141 a week Mr Hawke, agreed with Mr rraser that the commissions decision had ended the freeze. Mr Fraser rejected last night tax cuts as an alterna tive economic solution in a comment which cast doubts on tax reforms in this year's BUdgCl.

Government officials have been working for several months on detailed proposals ior tax reform in the Budget. Mr Fraser said: "I don't believe that, in these circumstances, tax cuts boost the economy because what people are looking for is security and certainty. "When inflation is coupled with unemployment, we have found that, when people's incomes have increased whether through tax cuts or wage increases they have not, in fact, spent more." Important precedent In an important precedent for other national wage hearings this year, the commission deducted the estimated 0.4 per cent contribution which devaluation made to the March quarter Consumer Price Index increase. The Government told the commission earlier this year it expected devaluation to add a total of at least 3 per cent to the CPI. The Opposition's spokesman on employment and industrial relations, Mr R.

Willis, said most of this devaluation effect would presumably come in the June quarter. "This means a discounting of the CPI of at least 2 per cent. "If the Bench goes ahead with that, I think it will cause an enormous reaction from the union movement. "That could well be the, point where indexation ceases to operate." However, Mr Hawke, who said after the last national wage increase that it could lead to the end of indexation, agreed that yesterday's decision kept indexation alive. Although the Government expressed its disappointment with yesterday's wage rise, the commission's decision reflects the progressively harsher approach it has taken in its quarterly judgments.

Its general practise has been to give a relatively higher percentage of full indexation the smaller rise in the CPI. Last year's September quarter increase of 2.2 per Continued, Page 12 PAGE 6: Editorial. PAGES 12 and 13: The Judgment and reaction. The Prime Minister appealed in Parliament for both price-setters and wage-earners to show the "greatest possible degree of restraint." In his statement ending the freeze, Mr Fraser said: "The pause, which had the support of the seven Heads of Government in Australia, seemed to offer a unique opportunity to break the incomes-prices spiral and thus slow down inflation. "The increase granted by the commission only six weeks after the $5.70 increase in the wages awarded in the previous national wage case means it would be unreasonable to expect employers to go on holding prices at this time.

"In these circumstances, we shall be advising the other parties to the Heads of Government agreement that we consider the pause should be formally terminated." (The other parties are the six State Premiers.) The secretary of the National Employers' Policy Committee, Mr G. Polites, and the president of the ACTU, Today's weather Metropolitan: Dry. Max temps: City and Liverpool 19. NSW: Showers in south, cool, dry remainder. Details, Page 45 Late news Gunmen fire warning shots AMSTERDAM, Tuesday.

South Moluccan gunmen holding hostages In a primary school at Bovensmilde fired a volley of warning shots this afternoon when a woman mental patient rushed through a police cordon towards th building. A Justice Ministry spokesman said the guerillas telephoned to ask authorities to remove the woman, who wn lying in a bicycle shed near the school. 1978 referendum on Upper House looms By IAN FRYKBERG, State Political Correspondent 5 AMSTERDAM, Tuesday. Gunfire and crying were heard early today from the primary school where South Moluccan terrorists are holding 10S children and six teachers hostage. Six shots were heard from the building in the village of Bovensmilde about 9 am, shortly after the sound of weeping.

The last shot hit a first-floor window in a nearby house. There was no explanation for the sudden firing but as far as observers could tell, no one was hurt. The terrorists in the school and another group, holding around 50 train passengers hostage a few kilometres away, have demanded a Boeing 747 jet to take them and 21 jailed South Moluccan extre mists out ot the country. But by mid-morning there was no word on the Govern Opposition defeat of the Government's scheme in the Legislative Council is therefore seen as only a formality. But the final decision will rest with referendum to be held about nine months after the special parliamentary sitting which starts on Tuesday.

Although no date has been set for the referendum, the ALP is looking at March or April as the most likely time. The final Labor plan is the result of months of bchind-thc-sccncs-wrangling and is a very careful proposal aimed at Riving Labor an initial edge, but one that Labor believes will stand up to public scrutiny. If Mr Wran Rains the approval of the voters, a special election is expected to be held within three months of the referendum to elect the first 15 members by the new method. For this election, 30 present members would have to retire and they would be replaced by the elected 15. These 15 would join the remaining 28 members elected under the old system, making a total of 43 members.

The two present casual vacancies caused by the death of two members would not be filled. ment's attitude to the demand for the Boeing 747 and the release of the jailed South Moluccans. The terrorists have told the Dutch Government they will shoot dead anybody sent to negotiate. A letter read on Dutch radio set a deadline of 2 pm tomorrow (10 pm Sydney time) for their demand to be met. "If not, there will be many deaths," it said.

The 105 children in Bovensmilde school arc the Government's most agonising concern. About 100 police and troops ring the school where the gunmen have shrouded the windows with old newspapers. The Government has decided to go ahead with the national election tomorrow, but because of the crisis campaigning has virtually stopped. PAGE 4: When Holland is not a home. The second 15 would be elected simultaneously with the 1979 Legislative Assembly elections and the last 15 simultaneously with the 1982 elections.

After this, 15 members of the Legislative Council would face election simultaneously with each Assembly election. This means that the term of Council members would be reduced from 12 years to the equivalent of three Assembly terms, which would be a maximum of nine years. The Upper House would not be fully elected by the new method until 1982. Under the system, the quota a candidate will have to get to be, elected will be one sixteenth of the total vote, plus one (about 6.2 per cent). This means that parties with a small following and independents will have little chance of forcing their way in.

The Government is looking at the question of providing compensation to MLCs whose terms of office would be affected by the proposals. Within two hours of Mr Continued, Page 2, with Editorial, Page 6. Yesterday he rejected pleas by the president of the ARL, Mr Kevin Humphreys, and the Australian coach. Terry Fcarnley, to reconsider his stand. Beetson said he felt guilty that he was taking the seat on the plane that belonged to another player in the selectors' eyes.

"I have been dropped from Australian teams before and I can handle that all right," he said. "But this is a different matter. 1 have actually taken someone else's place in the team and I did not feel that was rirht." p'ace has been taken by Parramatta's rugged prop, (Jraiani Oiling. Alan Clarion's report, more pictures, in Sport, back page of Section 2. In Finance The prospect of lower interest rates has been heightened following the record $452 million subscription to the Commonwealth May loan announced yesterday.

The Minister for Industry and Commerce, Senator Cotton, said last night he believed the downward movement in the Government's deficit could open the way for "some relief in monetary policy." "In particular, I look for an easing in the current level of interest rates I am speaking specifically of the early part of 1978," he said. Details, Front page, Section 2. Villagers kill Indian family CALCUTTA, Tuesday. Villagers burnt to death 11 members of a family in Path-arbandi, near here, yesterday after a quarrel. The victims were barricaded in their house and the building was doused with petrol and set alight.

A boy and girl got out but were pushed back. The girl finally escaped. Police arrested three people. ayar it.j. Arthur Beetson is still available for the rest of th; Rugby League world scries matches despite his withdrawal yesterday from the squad to go to New Zealand.

Beetson, named as Australia's captain lor the opening game of the scries against New Zealand in Auckland on Sunday, withdrew from the squad three hours before it was due to leave. He pulled out after learning the Australian selectors had originally omitted him from the 18-man squad on Sunday night. The Australian Rugby League, which has to ratify every Australian team, sent the list back to the selectors and later accepted it when Beetson name was included. Controversy over Fox Report likely From PETER BOWERS, Political Correspondent CANBERRA. Federal Government sources warned last night that the second Fox Report, to be released today, would be as controversial as the first.

Far from giving the green light to uranium mining in the Northern Territory, the report is believed to express the gravest reservations about the development ot any ot the four rich deposits in the Alli gator Kiver region. The report is believed to go so far as to recommend that one of the uranium deposits in the Territory never be developed because of the danger to the environment and wildlife. Officials said the second report could be interpreted as giving an early go-ahead to only one of the deposits, with a second mine coming into production several years later. It is expected to recommend that Kakadu National Park be expanded to include three deposits, bringing them under much tighter control from park authorities. Page 2: Code of safecnards for uranium exports.

tj. 3 i r' fx rt it'- i NSW electors arc likely to be asked in a referendum next March or April whether they accept the State Government's plan for a smaller Legislative Council elected by the people. The Premier, Mr Wran, announced the plan yesterday after it was adopted by the Parliamentary Labor Party (Caucus). It provides for an Upper House of 45 members elected by proportional representation, using the State as a single electorate. Members of the present Upper House of 60 scats are elected by the members of the Legislative Assembly and Council voting together.

If the new plan is adopted, Labor probably would have a slight majority in the Legislative Council by the middle of next year. At present the Opposition has 34 MLCs to the Labor Party's 24. Two scats are vacant. The Opposition condemned Mr Wran's proposals as a first step towards a Labor stranglehold on the Legislative Assembly, to be achieved through a redistribution in time for the next Assembly election. a a.ar.a.m ii.